Problem Set 6.pdf - Adobe Acrobat Reader DC X File Edit View Sign Window Help Home Tools Problem Set 6.pdf X ? Sign In 1 /2 138% 6) [8 points total] Vaccines are an example of a positive externality of consumption. When you get vaccinated against an infectious disease, you clearly benefit. But those who are unvaccinated also benefit because there is one fewer person from whom they can contract the disease. The marginal private benefit (i.e., inverse demand) of vaccines in a city is given by Lo MPB = 19.125 - 0.01875Q where Q is the number of vaccinated individuals (measured in 1,000s). The marginal external benefit is given by MEB = 11.475 - 0.01125Q. Each vaccine costs $9. a. [1 point] What is the equilibrium quantity of vaccines in a competitive market without government intervention? b. [1 points] What is the efficient quantity of vaccines? c. [3 points] In a graph with quantity of vaccines on the horizontal axis and price on the vertical axis, show how the answers to parts a and b are determined. On the same graph, show the deadweight loss associated with the inefficient under-consumption of vaccines from part a. d. [1 point] How large is the deadweight loss from the inefficient under-consumption of vaccines from part a? e. [2 points] What Pigouvian subsidy will lead to the efficient provision of vaccines? How much will that subsidy cost the government? What will deadweight loss be if your Pigouvian subsidy is implemented? 7:44 PM 11/1/2020